U.S. Turns to Shippers for Advice in Building National Freight Policy

The federal government is turning to obvious but oft-neglected sources—shippers and transportation advisers—for advice on how to improve the national freight system and boost supply chain competitiveness.

The recommendations from two groups—the Advisory Committee on Supply Chain Competitiveness and the National Freight Advisory Committee—will likely shape how the Commerce Department and Department of Transportation operate. Their findings could also influence how Congress approaches laws relating to transportation infrastructure, customs and trade policy.

Advisory committees are nothing new to Capitol Hill, but the focus on freight policy comes as legislators ramp up their rhetoric on the importance of moving goods and materials effectively, said Emil Frankel, director of transportation policy for the Bipartisan Policy Center.

In the short term, the largest opportunity for their recommendations to be realized is in DOT’s national freight plan and policy, and the next surface transportation bill. The current $105 billion spending act, which called on the U.S. to catch up with the likes of Germany, Canada and other Western countries in creating a national freight policy and a strategic plan, expires at the end of September 2014.

The ACSCC has a head start, having been established in November 2011. The 40-member group—with executives from BNSF Railway, Boeing, Campbell Soup, Halliburton, Menlo Worldwide Logistics, Pfizer and Target—is set to provide final recommendations to the Commerce Department in September on freight policy, trade and competitiveness, information technology and data, finance and infrastructure and regulations.

The final recommendations are likely to be bold, judging from the discussion during the committee’s June 4 meeting in Washington. The ACSCC wants to use already collected data to map major supply chains by commodities and to target major chokepoints and transfer nodes, including customs clearance points at ports and land borders, and metropolitan congestion.

The findings could then complement the DOT’s study on freight congestion by mode, providing the department with a better understanding on where it can “get the most bang for its buck” for its investments, said Cynthia Ruiz, deputy executive director at the Port of Los Angeles.

“In order to make products in the United States that are competitive, you need to bring the components for manufacturing entering into the country competitively and reliably,” said Anthony Barone, director of global logistics policy at Pfizer.

Ways to achieve this include reducing certain duties on some manufacturing components, streamlining customs border clearance and the granting of foreign trade zone designations, and modernizing U.S. export credit support. The executive branch agencies could complete some of the committee’s working recommendations, but others will need congressional approval.

The advisory committee floated the idea of creating a national supply chain executive dashboard, which would fuse already available sets of trade data and give real-time insight into supply chain threats. Also recommended is creation of a White House-sponsored “SWAT Team” that would complete the long-delayed and over budget "single window" for electronically processing trade data, known as the International Trade Data System.

There needs to a body that prioritizes freight projects of national significance and ensures such initiatives get funding, said Rick Gabrielson, Target’s director of international transportation. That virtual “referee” needs to ensure the states aren’t making piecemeal freight investments that fail to enhance to national network, he said.

The DOT’s work to create a national freight policy and strategic plan could help with such planning. But no such freight-focused funding mechanism exists, and future funding for grant programs that have aided freight projects in the past — Projects of National and Regional Significance and Transportation Investment Generating Economic Recovery—is uncertain.

The committee also recommended completing the Next Generation Transportation System, which will allow airlines to better manage capacity and reduce delays, and harmonizing air cargo security regulations with other countries. Members want the Federal Motor Carrier Safety Administration to hold off on further tightening of federal hours-of-service regulations for the trucking industry. The latest change to the HOS rules is slated to take effect July 1 unless an U.S. appeals court strikes it down.

The committee held off on taking a side in the debate over raising truck weights and sizes, deferring instead to the findings of an ongoing DOT study of the contentious issue.

How these recommendations will be melded into the DOT’s work to create a national freight policy remains to be seen. A clearer picture could emerge when the 47-voting members of the DOT advisory committee, which includes executives from Home Depot, Cargill and Con-way, meet for the first time later this month.

Insightful recommendations from the private sector and policy wonks, however, offer no guarantee the Obama administration and Congress will act on their suggestions. The National Surface Transportation Policy and Revenue Study Commission, set up through the 2005 surface transportation bill, called for a higher federal fuels tax and eventually foresaw charging drivers by how far they traveled as a way to boost the Highway Trust Fund.

Those suggestions went unheeded, but recommendations to streamline construction projects and focus on the most-needed infrastructure fixes have become a mantra for Congress and the administration. Even selective listening can deliver results.